Internal Capital @ FO - typical terms?
currently run a fund I started with track record of top performance.
am looking at running nine figures (+scaling from there if returns are good) of primarily internal capital at a family office where I would be fairly autonomous with ~36 month lockup.
Anyone here have any idea what "typical" or normal compensation terms would be for someone running a nine figure (+) internal pool of capital like this?? salary?? performance share??
Any input is appreciated
typically 2% of AUM for management fee and 20% of profits
what makes you say that or what experience do you base this response on?
thanks, but I think that seems extremely high if the FO is carrying some of the infra and putting up the capital. I don't think that is realistic
why aren't you just going over to Millennium? This is their bread and butter.
that's max portfolio DD based on your AUM (not individual positions)...so lets assume Millennium gives you 100mm of capital to start...you don't need to use ALL 100mm right off the bat. Say you use 50mm (lets say you go long 50mm AAPL and short 50mm MSFT)....and then if your portfolio goes down 5% (AAPL underperforms by 5%...so you are down $2.5mm which is 2.5% on your 100mm AUM and thus halfway to your max DD) you can then ADD another 50mm at these better prices. This forces you to be disciplined when you take positions...and has proved a very good risk mgmt strategy for Millennium over the years.
on a separate note...Family Offices tend to not be active traders...rather they invest in hedge funds who do the trading. While there are some family offices that trade their own accounts...they are a VERY small minority. Investment expertise is notoriously difficult, and FO managers are risk averse..they don't want to get fired....so they outsource the career risk to hedge funds. FO's are just generally not setup to be individual investment managers...they are typically setup to be a fund of funds.
Don't think this is the place to get answers on this question but would recommend looking through the forum and PMing people who run money. What kind of strategy do you run?
x
speaking of HF allocators...what is the current route for a strategist who comes up with a new trading strategy, to get funded at a multi-strat?
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